Making a Will and putting provisions in place during your lifetime can give both you and your family peace of mind so that you can ensure your wishes are carried out after your death. If you don’t put provisions in place during your lifetime and die without making a Will, the laws of intestacy will govern how your estate will be distributed which means your estate could go to someone you would not have chosen to distribute it to. A key part of the estate planning process is deciding how you would like your estate to be distributed along with any specific gifts you would like to make and who to.
This 4-part series explains what gifts can be made in a Will and what you should consider when making them.
What types of gifts can you make in a Will?
- Pecuniary gift – this is a gift of money in a Will to a beneficiary
- Specific gift – a gift of a property or item i.e. rings
- Residuary gift – a gift of a share of the remainder of your estate after debts, funeral costs, taxes and other gifts have been paid
- Contingent gift – a gift that only takes effect if a certain condition is met i.e. being married to X at the date of death or an age condition i.e. reaching the age of 21
- Charitable gift – a gift to a registered charity. These gifts are exempt from inheritance tax.
Let’s look at them in more detail: –
Pecuniary gift – this is a gift of money to a friend, family member or even a charity. The sum of money can be as much or as small as you wish it to be. The gift can be made on your death or on the death of you and your spouse and in some cases your children also. As long as the will is clear as to when the gift should come into effect and what sum of being gifted and who to, the gift will be valid.
Example: I give £20,000 to my sister, Tamsin Smith.”
Specific gift – a specific gift can be a gift of land, property, items such as jewellery, cars, possessions, gifts of sentimental, high or low value. You can also gift bank accounts, savings accounts such as ISA’s and even investments.
Example: “I give my white gold necklace to my daughter Caroline”
Residuary gift – the residue of your estate is the remainder of your estate after debts, funeral costs, taxes and other gifts have been paid. The residue of your estate can be gifted to one person or multiple people in shares, fractions or percentages. It can also be shared between family, charities or elsewhere.
Pets can also be gifted in a Will. More information on gifting your pet in your Will can be found here.
Should gifts be set out in a Will or letter of wishes?
You may prefer to set out the gifts you wish to make on your death in a separate letter of wishes. While you are able to do this, it is important to be aware that any gifts set out in a letter of wishes are not legally binding which means that although your chosen executors may follow your wishes, they are not legally bound to do so. Specially stating the gift in a Will avoids this and also prevents any room for dispute from others.
Leaving a gift in your Will can provide financial security to your loved ones or even the opportunity to leave items that are special to you, to family and friends. It is also a good option to consider if you are wanting to reduce the size of your estate for inheritance tax purposes while gifting to charities that are close to your heart due to them being exempt from IHT.
If you have any questions or need any guidance with the preparation of your Will or LPAs, please speak to one of our will writers today
